The Week Ahead: Retail sales are up for the seventh month in a row, but with globally linked economies many investors question how the European slow down will impact the U.S. recovery especially exports as the rising value of the Dollar versus the Euro inflates prices. More clues to the U.S. economy via Housing starts and the Producer Price Index are due Tuesday while Wednesday spotlights the Consumer Price Index. The Jobless Claims, Leading Indicators, and the Philadelphia Fed Survey will round out this weeks reports on Thursday.
Stocks to Watch: Financial stocks have led recent weakness in the market as seen by the Select Sector SPDR’s Financial ETF (XLF). Credit card companies such as Visa (V) and Mastercard (MA) declined sharply as the Senate moved to regulate debit card fees as part of financial reform, but some analysts see this getting deleted in the final bill. Tivo (TIVO) crashed 41% on a federal appeals court planned rehearing of a patent suit with DISH and Echostar. Hewlett-Packard (HPQ) may have trouble hitting revenue targets as 20% of its business could be hurt by the Euro plunge.
Special Note: Back to back triple digit declines for the Dow Industrials may have investors on edge this week. A look at the Volatility Index (VIX) shows a significant reversal on an intermediate and longer term basis with much higher than normal downside volatility. A technically sensitive area on a DOW chart surrounds 10,365. Recall September 29, 2008 when Congress initially rejected the TARP bailout and the market plunged 777 points. After the TARP approval and market bounce, the DOW fell back through 10,365 and hit an air pocket plunging 3000 points over the next 7 weeks. Correlate this with the recent market plunge and bounce with ties to the recent European bailout package for Greece.
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